5 years after Finance Control Board came to rescue Springfield, city has $34.5 million in reserves

File photo by Mark M. Murray / The RepublicanControl board Chairman Christopher F. Gabrieli, a venture capitalist and former gubernatorial candidate, seen at a board meeting earlier this year, has been chairman since 2007.

SPRINGFIELD - Five years ago, the Finance Control Board arrived to rescue this city.

No rose-strewn paths greeted these state-imposed saviors, who consisted of three appointees of former Gov. W. Mitt Romney, then Mayor Charles V. Ryan and Domenic J. Sarno, the future mayor who was then president of the City Council.

They soon learned what Ryan and Sarno already knew: Running a $41 million deficit and seemingly devoid of mechanisms to help itself, the state's third-largest city really was collapsing.

"The city was insolvent, which means that it did not have the capacity to pay its bills. It reneged on the contracts it had with its employees. The city was owed (nearly) $50 million" in back taxes," Ryan said.

Today, with the control board's tenure - and extraordinary powers - set to expire on Tuesday, Springfield has $34.5 million in cash reserves.

There's another $54.8 million banked and committed for other uses, along with rigorous controls that restrict spending and pursue tax deadbeats until resolution, officials say.

"The city is positioned better than it ever has been," says city auditor Mark J. Ianello. "The city has never been in a better financial position than we are now."

Gov. Deval L. Patrick is due to attend a noon ceremony on Tuesday at City Hall at which the control board dissolves itself and returns power to Springfield's elected leaders.

"The city is in much better shape," Patrick said Friday during a visit here Friday to sign a transportation reform bill into law. "There are controls in place."

The state won't be stepping out of the picture entirely, though. Patrick said the local government liaison in the governor's finance department will always be available and he'll continue to take a personal interest in Springfield's affairs.

"I will continue to be a partner," Patrick said.

As the control board's five-year occupation of mess-to-success draws to a close, others say its work has been about far more than numbers.

Fear, pain, bitterness and relief, not to mention lawsuits and lots of politicking, all had roles in the control-board era of the City of Homes.

Stephen P. Lisauskas

"The city is in sound financial shape because of sacrifices and hard work by many, many people," said Stephen P. Lisauskas, control board executive director.

For example, the school district lost 1,325 experienced teachers to better-paying jobs in nearby communities during the control board's first four years, officials say.

"We just bled," said Timothy T. Collins, president of the Springfield Education Association.

Teachers, along with police, firefighters and members of other municipal unions - the city has about 6,500 employees - forfeited much of the cash due to them from a wage freeze and dropped lawsuits as a condition of settling their contract disputes, according to the union chief.

Collins contends that a big part of the multimillion-dollar cash-reserve cushion the control board is trumpeting consists of the years of pay raises union workers lost.

"We were probably the biggest contributor to that," Collins said.

Not exactly, says Lisauskas. The five-year teachers' contract ratified in 2006 included retroactive pay, he said. The city's joining the state Group Insurance Commission and other efficiencies have saved millions of dollars, according to Lisauskas.

"I don't think Tim's point really holds," he said.

Former Mayor Michael J. Albano imposed the wage freeze in 2003 in an emergency action to deal with a reduction in state funding. The control board continued the freeze until new contracts were reached with all 28 labor unions.

Romney and the state Legislature established the five-member control board in July 2004, taking the power to make financial and personnel decisions from the mayor, City Council and School Committee. Nothing could be spent, and no employee could be hired or fired without control board consent.

Some officials and residents expressed outrage that locally elected officials were usurped by state gunslingers, but others said it was an extraordinary step made necessary by an extraordinary problem.

"The argument was, 'Local people should be in charge.' Well, it was local people in charge, and they didn't do a very good job," City Councilor Timothy J. Rooke said.

Along with Ryan and Sarno, the original control board included state appointees Alan L. LeBovidge, who was state commissioner of revenue, as chairman, Thomas H. Trimarco, a former deputy state treasurer, and Michael "Jake" Jacobson, who specialized in turning around troubled corporations.

The original board ruled until 2007 when Patrick, a Democrat, appointed current members, including chairman Christopher F. Gabrieli, a venture capitalist and former gubernatorial candidate, James O'S. Morton, who is president and chief executive officer of the YMCA of Greater Springfield, and Robert G. Nunes, state director of municipal affairs and a former mayor of Taunton. They are joined by Sarno and William T. Foley, the current council president.

The second part of the two-pronged state bailout was a $52 million interest-free loan. The city wound up tapping the loan a few times to meet monthly payroll.

The $22 million Springfield has yet to spend of the loan is being combined with cash reserves, and the resulting $46.8 million will provide financial aid and scholarships to high school graduates from low-income families in a measure called the Springfield Promise Program.

File photo by Christopher Evans / The RepublicanFormer Control Board Executive Director Philip Puccia, seen during a meeting in Sixteen Acres in 2006, hopes that the board's legacy will be that the city stays well managed.

In what Ryan and others believe to have been one of its most significant steps, the control board appointed Philip Puccia, of Andover, a former official with the Massachusetts Bay Transportation Authority, as its executive director within its first month. Lebovidge called Puccia a bottom-line "bulldog."

Puccia took over the day-to-day authority to run the city, and he and Ryan had a chemistry.

"He was just the guy we needed," Ryan said.

Puccia, who now works for JP Morgan Securities in Boston, hopes the control board's legacy will be that Springfield stays well managed.

"I was happy to have been involved with two different control boards, several different City Council presidents and Charlie Ryan, and I think that we did a good job and I think the control board is doing a good job now," he said recently.

Judy R. Ceravolo, former president of the Springfield Cafeteria Workers Association, has reason to wince at the memory of the control board, but does it with some fondness for Puccia.

Puccia helped the union in its bid to take over the department before the control board instead decided in June 2006 to privatize it. Some cafeteria workers lost jobs and others now work for the company that runs the service but at lower wages and reduced benefits.

"There was a lot of pain involved, (but) I have to say the gentleman who was involved, Mr. Puccia, was very good to us," Ceravolo said.

Puccia's management skills were vital because the city's plunge was more dramatic than many people realized, Trimarco said.

"You'd say, 'How can this be done?'" Trimarco said. "Bankruptcy was a legitimate issue."

There were labor contracts the city couldn't afford, budgets that for years were incorrectly based on 100 percent property tax collection and $47 million in unpaid property taxes.

The labor contracts became budget-busters when step increases increased base salaries for thousands of employees, in addition to the percentage raises, according to Lisauskas, the executive director since Puccia left in 2007.

Today, a key control put in place by the board will allow the council to demand that the new chief administrative and financial officer show how pay raises in labor contracts fit into long-term analyses, Lisauskas said.

In addition, budgets are based on the control board's conservative approach of 98 percent tax collection, Comptroller Patrick S. Burns said.

The city now also follows up warnings to deadbeat property owners by placing liens, foreclosing on properties and auctioning them off to seize at least some of the owed revenue, he said.

In the four years before the control board, the city collected $17.1 million in back taxes, penalties, interest and auction sales of such tax-title properties, he said.

Since 2005, the total is $33 million.

"People are coming in and paying because they know there's consequences," Burns said.

Perhaps no control board decision has riled people more than the trash fee. Imposed in 2007, the city charges $90 a year for a trash-collection service. The control board said the city needed the $4 million in revenue to balance the budget. (Sarno announced on Thursday the trash fee was being reduced to $80 a year thanks to increased recycling.)

State Rep. Cheryl A. Coakley-Rivera, D-Springfield, was lead plaintiff in a lawsuit that got the original version of the trash fee declared illegal. The control board was forced to revise the rule into an enterprise fund that guarantees the fee is used only to collect trash.

In January, Coakley-Rivera also succeeded in limiting the life of the fee. In the same financial-relief law that requires that the city hire a chief administrative and financial officer, she included a measure to abolish the fee as of July 31, 2011.

So, after five years and a nearly $100 million budget swing from the red to the black, is the city ready to manage itself? The answer is mixed.

"Unfortunately I do not think that we are," Councilor Rosemarie Mazza Moriarty said.

Moriarty, who will be leaving the council, said the control board has done a poor job of preparing officials by restricting the flow of information to councilors and other officials.

Rooke believes the control board's expertise is still needed, especially since the new financial officer's powers ultimately will be only advisory.

"I wish the governor had extended the stay of the control board," Rooke said.

Sarno, though, is convinced the control board has instilled a sound management philosophy to poise the city for self-rule.

"I appreciate what the control board and its staff have done, to put us in a much better situation, but now it's time to move forward," the mayor said.

Morton said he believes the city is ready to manage itself. A big reason for that are the high-quality officials the control board has installed in the past few years: Police Commissioner William J. Fitchet, School Superintendent Alan J. Ingram, Chief Development Officer John D. Judge and the finance staff, he said.

"And, naturally, we have confidence in Mayor Sarno to be able to carry the city forward," Morton said.

Gabrieli said a strong management system has been installed, including the uniformity of having the MUNIS accounting software in all departments, overseen by solid finance officials.

"The question of can Springfield continue to make sound fiscal decisions is going to be a question of political leadership," Gabrieli said.

Staff writer Peter Goonan contributed to this report. He can be reached a pgoonan@repub.com